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Titanic Tax Lessons

Today the U.S. Senate is scheduled to vote on the Buffett Rule that would require those making over $1 million a year to pay a minimum tax rate of 30% to put them in line with the average middle class American. Supporters of the proposal say that this is a matter of tax equity requiring the wealthiest to pay their fair share. Critics say that Buffett Rule seeks to divide the country and punish the wealthy.

Well, let’s say that we’re all on a big cruise ship, an appropriate analogy given all the media attention about the Titanic.

Our cruise ship has developed a whole in the hull of the ship but unlike the Titanic the amount of water coming in is manageable if all on board help bail. According to the ship’s rules almost all adult passengers are issued a three-gallon bucket for the task and instructed to fill the bucket to the extent of their physical ability. Those with more physical strength would be expected to lift heavier buckets than those who are less able.

But the ship’s rules say that first-class passengers on the cruise are only issued tea cups for them to help keep the ship from sinking.

Well it wouldn’t take long for the rank-and-file passengers to start complaining about this situation and demanding that the first-class passengers also be given a bucket so that they can do their fair share of the work.

Can you imagine the riot if those first-class passengers proclaimed that such a request to change the rules is divisive and meant to simply punish the wealthy for being so successful that they can afford a first-class cabin?

That’s what we have with the Buffett Rule. The wealthiest Americans aren’t doing their fair share of the bailing. And it’s not just the deficit waters that need to be eliminated, our ship needs to be reinforced with a stronger infrastructure so that the ship can not only get back on course but also be safer in future rough waters. But the wealthy don’t want to lend a hand on that either even though they would benefit also.

Passing the Buffett Rule is doing nothing more that changing the rules on this ship that is sinking. It’s a matter of tax fairness and strengthening our economy. We’re all on board this economic ship and bailing us out of danger can’t be done with some of us using a tea cup.

April 16, 2012

Frank Knapp, Jr. is President & CEO of the South Carolina Small Business Chamber of Commerce. Cross-posted at www.unconflictedsc.com.